How Does the Student Loan Bubble Differ From the Foreclosure Crisis?

One key difference in the foreclosure crisis versus the student loan bubble is that many believe there is no possibility of relief.  That is something that we seek to change every day for our clients via affirmative lawsuits for discharge of what is really consumer debt as it was debt issued beyond the true cost of education, settlements for pennies on the dollar for private student loans owned by NCSLT or other investment trusts, lawsuits for consumer law violations such as the FCRA, FCCPA, FDCPA and the TCPA, and making sure our clients obtain all forgiveness possible.

But for many others who are not aware of these options, it is a common mis-perception that there is no way out.  In examining “What a Student Loan Bubble Bursting Might Look Like,” Allie Conti quoted Persis Yu, a staff attorney at the National Consumer Law Center, in arguing that short of fleeing abroad, or going underground, you can’t ever walk away from student debt.

Studies show that nearly 40 percent of borrowers are expected to default on their student loan payments by 2023.  For those who do not believe that we are in a bubble, I ask how do you explain such a high default rate?  The cost of education is simply creating an absurdly high student loan balance for many.  Student loan servicers push forbearance like a drug – which continues to increase the balance.  Interest is capitalizing at every turn  – whenever someone comes off forbearance or is late in renewing an income driven plan.  Whether we are in a bubble or not, it’s clear that the current system cannot continue unchecked — trapping a generation of students in servitude, straining taxpayers and the solvency of our own government.